The country where power consumers are made to face long hours of power shortage (sometimes up-to 6 hours in some parts), seems to be having this shortage “artificially” created. Cash strapped distribution companies are resorting to power outages than buying additional power from newly commissioned power plants. It is pertinent to note that for DISCOMs “profitability” issue is deterring them to buy additional power. Cost of procuring power for these companies is costlier than their usual selling business.

According to an article in ET (click here), about 18000 MW of new power capacity is idle as there are no buyers. This capacity if utilized completely is expected to serve around 2 crore households. Only Rajasthan, UP and Tamil Nadu are the states who have invited bids to buy long term power in over 2 years.

For these idle power projects, its getting harder to sign Fuel Supply Agreements (FSAs) as it is a mandate, under the agreement, that only those projects can draw more coal which have signed power purchase agreements(PPAs). In this condition, the projects have no other option but to aggravate inadvertent contribution to NPAs (Non performing assets) in power loans from banks.